PERSEUS MINING LIMITED — Interim / Quarterly Report 2017

Feb 23, 2017

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ABN 27 106 808 986

Interim Financial Report

For the Half-Year ended

31 December 2016

This interim report incorporating Appendix 4D is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.3

Perseus Mining Limited Contents

	Page
Appendix 4D	1
Corporate directory	2
Directors’ report	3
Interim Financial statements	8
Directors’ declaration	31
Independent auditor’s review report	32

Perseus Mining Limited Appendix 4D For the half-year ended 31 December 2016

Appendix 4D under the ASX Listing Rule 4.2A.3

Results for announcement to the market

		Six months		Six months
		to		to
		31 December 2015		31 December 2016
		$‘000		$‘000
Revenue from ordinary activities	Down 25% from	148,651	to	110,866
(Loss) / profit after tax from ordinary activities	Down 314% from	11,972	to	(25,610)
(Loss) / profit after tax attributable to members	Down 284% from	12,127	to	(22,285)

Net tangible assets per share

	31	December	31	December
		2015		2016
Net tangible assetsper share		$1.3		$0.7

Dividends / distributions

No interim dividend was paid or declared for the period ended 31 December 2016.

Details of entities over which control has been gained or lost during the half year

Nil.

Explanation of results

See commentary on results in the Directors’ report on pages 3-6.

Page 1

Perseus Mining Limited Corporate directory

Directors	Reginald Norman Gillard	Non-executive chairman
	Jeffrey Allan Quartermaine	Managing director
	Colin John Carson	Executive director
	Terence Sean Harvey	Non-executive director
	Michael Andrew Bohm	Non-executive director
	John Francis Gerald McGloin	Non-executive director
	Alexander John Davidson	Non-executive director
Company secretary	Martijn Paul Bosboom
Registered and	Level 2
corporate office	437 Roberts Road
	Subiaco, Western Australia 6008
	Australia
	PO Box 1578
	Subiaco, Western Australia 6904
	Telephone:	(61 8) 6144 1700
	Facsimile:	(61 8) 6144 1799
	Email address:	info@perseusmining.com
	Website:	www.perseusmining.com
Ghana office	4 Chancery Court
	147A Giffard Road, East Cantonments
	Accra - Ghana
	PO Box CT2576
	Cantonments
	Accra - Ghana
	Telephone:	(233) 302 760 530
	Facsimile:	(233) 302 760 528
Côte d’Ivoire office	Cocody II Plateaux Vallons, Quartier Lemania
	Lot 1846 ilot 169 derrière Pako Gourmand
	28 BP 571 Abidjan 28, Côte d’Ivoire
	Telephone:	(225) 22 41 9126
	Facsimile:	(225) 22 41 0925
Share registry	Computershare Investor Services Pty Limited	Computershare Investor Services Inc.
	Level 11	Level 3
	172 St Georges Terrace	510 Burrard Street
	Perth, Western Australia 6000	Vancouver, British Columbia V6C3B9
	Australia	Canada
	Telephone: (61 3) 9415 4000	Telephone: (1 604) 661 9400
	Facsimile: (61 3) 9473 2500	Facsimile: (1 604) 661 9401
	www.computershare.com	www.computershare.com
Auditors	Ernst & Young
	11 Mounts Bay Road
	Perth, Western Australia 6000
Stock exchange listings	Australian Securities Exchange	(ASX – PRU)
	Toronto Stock Exchange	(TSX – PRU)
	Frankfurt Stock Exchange	(WKN: AOB7MN)

Page 2

Perseus Mining Limited Directors’ report

Your directors present their report on the consolidated entity (referred to hereafter as the “group”) consisting of Perseus Mining Limited (“Perseus”) and its controlled entities for the half-year ended 31 December 2016 (the “period”). Perseus is a company limited by shares that is incorporated and domiciled in Australia. Unless noted otherwise, all amounts stated are expressed in Australian dollars.

DIRECTORS

The following persons were directors of Perseus during the period and up to the date of this report:

Reginald Norman Gillard	Non-executive chairman
Jeffrey Allan Quartermaine	Managing director
Colin John Carson	Executive director
Terence Sean Harvey	Non-executive director
Michael Andrew Bohm	Non-executive director
John Francis Gerald McGloin	Non-executive director
Alexander John Davidson	Non-executive director

RESULTS

The group’s net loss after tax for the half-year ended 31 December 2016 was $25.610 million (31 December 2015: $11.972 million profit). The change from net profit after tax to net loss after tax is largely attributable to the US$20.000 million settlement of a legal dispute with Bayswater Construction & Mining sarl (“BCM”) which did not occur in the comparative period. Furthermore, there was a $37.785 million decrease in revenue in the current period to $110.866 million (31 December 2015: $148.651 million). This related to a decrease in gold sold due to the timing of sales, build-up of gold inventories in circuit as well as lower gold prices realised in the current period. The foreign exchange gain decreased by $8.756 million in the current period to $9.107 million (31 December 2015: $17.863 million), related to the weakening of the Australian dollar against the United States dollar, being less in the half-year ended 31 December 2016 compared to the comparative period. In addition, operational expenses increased as a result of increased mining activity at the Edikan Gold Mine (“Edikan” or “EGM”). Further information on the group’s results can be found in the Statement of Comprehensive Income on page 9.

PRINCIPAL ACTIVITIES

The principal activities of the group during the period were mining operations and the sale of gold, mineral exploration and gold project evaluation and development in the Republics of Ghana, Côte d’Ivoire and Burkina Faso, in West Africa.

REVIEW OF OPERATIONS

During the period, the group continued to focus its activities on its three key projects, namely Edikan in Ghana, Sissingué Gold Project (“SGP” or “Sissingué”) and Yaouré Gold Project (“Yaouré”), in Côte d'Ivoire.

Edikan Gold Mine - Ghana

The group owns a 90% interest in the EGM, a producing gold mine located in Ghana. The remaining 10% interest in the EGM is a free carried interest owned by the Ghanaian government.

Mining and Processing Operations

During the period, there was an extended shutdown of the Edikan plant to enable a programme of upgrade works to be completed. This programme of works, which is now largely complete, was designed to improve future plant operating performance and reduce maintenance costs.

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Perseus Mining Limited Directors’ report

Operating results at the EGM for the 6 months to 31 December 2016 and the corresponding period in 2015 were as follows.

Key operating parameter	Units	31 December 2016	31 December 2015
Waste + ore mined	bcm	9,061,000	7,644,000
Ore mined	tonnes	2,995,000	2,053,000
Ore milled	tonnes	3,199,000	3,537,000
Head grade	g/t gold	0.89	0.80
Recovery	%	83	84
Gold produced	oz	75,999	76,693

Gold production for the period was 75,999 ounces at an all-in site cost (“AISC” - including production, royalties and sustaining capital costs) of US$1,583/oz, up 24% relative to the corresponding period in 2015 largely as a result of increased waste mining activity and the capital works programme undertaken during the period.

During the period a total of 9,061,000 bcms of material was mined from the Esuajah North, Fetish, Chirawewa and Fobinso open pits, including 2,995,000 tonnes of ore grading 1.03g/t plus 15,570,000 tonnes of waste material. The quantity of material mined increased as a result of accelerated waste stripping of Chirawewa, Esuajah North and Fobinso Final to provide access to fresh ore during the period compared to the comparative period. The ROM ore stockpiles that include both high and low grade ore (but not mineralised waste) plus crushed ore decreased by 205,000 tonnes to 1,854,000 tonnes grading 0.6g/t during the period. The reduction in the stockpile reflected a deficit of ore mined relative to ore milled during the period.

A total of 3,199,000 tonnes of ore grading 0.89 g/t of gold was milled during the period. Overall gold recovery of 83% resulted in the recovery of 75,999 ounces of gold, whilst 74,063 ounces of gold were poured during the period. A total of 66,383 ounces of gold were sold at a weighted average price of US$1,187/oz. A total of 165,973 ounces of gold were committed to forward sales contracts at a weighted average gold price of US$1,287/oz as at the end of the period, including 100,000 ounces at a weighted average gold price of US$1,307/oz that is currently earmarked to support the proposed debt financing of the SGP.

Completion of Capital Works

The capital investment programme that Perseus has undertaken at Edikan during the last two years, that has been a major factor in elevating the mine’s AISC during this period, is now largely complete.

During the period, in addition to the completion of a US$9.0 million programme of capital works aimed at upgrading Edikan’s crushing and milling circuits to increase availability and reduce maintenance costs and time, construction of housing and the relocation into the new dwellings of families displaced by the opening up of the Fetish, Chirawewa and Esuajah North open pits was also completed. In total, 186 new houses and 12 institutional structures have been constructed at a cost of approximately US$30 million.

Development of the Esuajah North open pit has been advanced and fresh ore is now being mined from the pit. Blasting of fresh ore commenced on 26 November, and in coming months ore will be drawn from four pits on the Edikan licence area including Fobinso, Fetish, Chirawewa and Esuajah North. With the opening up of these work areas, the amount of investment required in waste stripping will materially reduce in coming months.

Sissingué Gold Project, Côte d’Ivoire

The group owns an 86% interest in the SGP, located in the north of Côte d'Ivoire. The Company’s 86% interest in the SGP reflects a 10% free carried interest in favour of the Government of Côte d'Ivoire and 4% owned by local interests. The development of Sissingué provides Perseus with a relatively low cost, low technical risk opportunity

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Perseus Mining Limited Directors’ report

to pursue its strategy of diversifying its production base by establishing a second financially robust, producing mine in Côte d’Ivoire

During the period, execution plans for the full-scale development of Sissingué were activated, development work ramped up and is currently on track to achieve the goal of producing first gold in the March 2018 quarter. Contracts that accounted for approximately 50% of the estimated construction scope of works were awarded to members of the Lycopodium group and they commenced work as scheduled on 1 September 2016. Perseus’s construction team which is responsible for managing the remaining 50% of the scope of works has continued to build during the period. Off-site, detailed engineering is largely complete as is the procurement of all long lead items of plant and equipment. The construction team has mobilised to site and is well underway on the pouring of concrete works associated with the plant as well as the installation of underground services. Work on the construction of the airstrip, tailings dam and mine camp is well advanced.

During the period, Perseus continued its negotiations with Macquarie Bank Limited and BNP Paribas towards a US$60 million project financing facility which would partially fund the development of Sissingué. However, as a result of uncertainty associated with the Sissingué Ore Reserve due to the re-estimation of the Sissingué Mineral Resource, Perseus decided to reduce the level of project debt finance that it sought from its debt financiers. This initiative was taken to avoid the potential for over-gearing the project but requires a greater proportion of development funds to come from internal sources including cash flow and cash reserves. Discussions are at an advanced stage with Macquarie Bank to provide a project debt financing facility. Negotiation of the revised facility is expected to be finalised and documentation completed in the March 2017 quarter. A total of 100,000 ounces of gold has been sold forward at an average price of approximately US$1,307/ounce and is currently earmarked to support the proposed debt financing of the SGP.

Yaouré Gold Project, Côte d’Ivoire

Following the acquisition of Yaouré, through the merger of Perseus and Amara Mining plc (“Amara”) in April 2016, Perseus’s study team immediately commenced assessing the scope of work required to comprehensively upgrade the existing preliminary feasibility study of Yaouré to definitive feasibility study (“DFS”) standard. Following this initial assessment which included examining all of the work previously conducted by Amara, contracts for all material work packages required to prepare the DFS were awarded to a range of consultants and contractors including Runge Pincock Minarco (“RPM”) who will perform the role of lead consultant for the study.

During the period, Stage 1 of the DFS was largely completed and Stage 2 commenced and is due to be completed late in the March 2017 quarter. This work confirmed that there were no “fatal flaws” in the work previously conducted. Some additional areas of study were identified along with a number of optimisation opportunities focused particularly on the optimisation of drilling and blasting and comminution that warrant closer examination.

An initial 42,000 metre infill DD and RC drilling programme including grade control drilling in targeted areas, designed to enhance Perseus’s confidence in the existing Mineral Resource estimate as well as examine opportunities for incremental expansion of the Mineral Resource, commenced late in the period. A 40,000 metre Rotary Air Blast (“RAB”) drilling programme to sterilise the planned sites of mine infrastructure is also planned and will start in the March 2017 quarter.

Completion of the DFS is scheduled to take a total of 12 months from commencement which should see the full study completed by August 2017. If current efforts to contract additional drilling rigs to be deployed on The Mineral Resource confirmation drill programme are successful, then results of the study could be available around the middle of 2017 rather than August 2017. Drilling results and other information associated with progress of the DFS will be progressively released as the study progresses.

The terms of Exploration Permits 168 and 397, the two tenements on which Yaouré is located, have been extended for a period of two years from 1 December 2016 by the Ivorian Ministry of Industry and Mines. It is

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Perseus Mining Limited Directors’ report

expected that within this period, Perseus will complete the DFS for Yaouré, negotiate a Mining Convention, apply for and be granted an Exploitation Permit for the Yaouré development and take a positive development decision.

Encouraging progress has been made on negotiating rates of compensation to be paid to landowners for access to land required to develop the project. It is anticipated that these negotiations will be materially advanced during the March 2017 quarter.

ROUNDING

The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) where noted ($’000) under the option available to the group under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. This legislative instrument applies to the group.

AUDITOR’S INDEPENDENCE DECLARATION

Section 307C of the Corporations Act 2001 requires our auditors, Ernst & Young, to provide the directors of Perseus with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on the next page and forms part of this directors’ report for the half-year ended 31 December 2016.

On 27 May 2016, the Board granted approval under section 324DAA of the Corporations Act 2001 for Mr Gavin Buckingham to continue as the Group’s audit partner for two additional successive financial years, commencing 1 July 2016. The approval was granted at the recommendation of the audit and risk committee, based on the following reasons:

• Following a UK Scheme of Arrangement, Perseus Mining Limited acquired Amara Mining Plc and therefore due to the complexity of such a business combination, there was a benefit in retaining the current audit partner for a further two years whilst management worked through all of the accounting and operational issues associated with the acquisition;

• The existing independence and service metrics in place are sufficient to ensure that auditor independence would not be diminished by such an extension; and

• Mr. Buckingham will continue to abide by the independence guidance provided in APES 110 ‘Code of Ethics for Professional Accountants’ as issued by the Accounting Professional and Ethical Standards Board and Ernst & Young’s independence requirements.

Signed in accordance with a resolution of directors.

J A Quartermaine

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Managing Director Perth, 24 February 2017

Page 6

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

Auditor’s Independence Declaration to the Directors of Perseus Mining Limited

As lead auditor for the review of Perseus Mining Limited for the half-year ended 31 December 2016, I declare to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

• b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Perseus Mining Limited and the entities it controlled during the financial period.

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Ernst & Young

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Gavin Buckingham Partner 24 February 2017

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Page 7

GB:EH:PRU:069

Perseus Mining Limited Financial statements 31 December 2016

Contents

Contents	Page
Financial statements
Statement of comprehensive income	9
Statement of financial position	10
Statement of changes in equity	11
Statement of cash flows	12

Notes to the consolidated financial statements About this report 13

	About this report					13	13
	Performance		Operating assets and	Capital and financial risk	Other Information	Unrecognised items
			liabilities	management
1.	Segment information	4.	Cash and cash	11. Derivative financial	14. Disposal group held	15. Contingencies
			equivalents	instruments	for sale
2.	Other income /	5.	Receivables	12. Financial risk		16. Commitments
	expenses			management
3.	Income tax benefit /	6.	Inventories	13. Issued capital and		17. Events occurring
	(expense)			reserves		after the end of	the
						reporting period
		7.	Available for sale
			financial assets
		8.	Property, plant and
			equipment
		9.	Mine properties
		10. Mineral interest
			acquisition and
			exploration
			expenditure
Signed reports
	Directors’ declaration						31
	Independent auditor’s review report						32

These half-year financial statements are the financial statements of the consolidated entity consisting of Perseus Mining Limited and its subsidiaries. The financial statements are presented in the Australian currency.

Perseus Mining Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Perseus Mining Limited Second Floor 437 Roberts Road Subiaco, Western Australia 6008 Australia

A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities in the directors’ report on pages 3 to 6, which is not part of these interim financial statements.

These interim financial statements were authorised for issue by the directors on 24 February 2017. The directors have the power to amend and reissue the interim financial statements.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the company. All press releases, financial statements and other information are available at our News and Reports section on our website at www.perseusmining.com.

Page 8

Perseus Mining Limited Statement of comprehensive income For the half-year ended 31 December 2016

Notes Continuing operations Revenue Other income 2 Changes in inventories of finished goods and work in progress Contractors, consumables, utilities and reagents Royalties Employee benefits expense Depreciation and amortisation expense 2 Foreign exchange gain 2 Finance cost 2 Impairment of available-for-sale financial asset 7 Write-off of exploration Legal Settlement 2 Other expenses (Loss) / profit before income tax Income tax benefit / (expense) 3 Net (loss) / profit after income tax Other comprehensive (loss) / income Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Net changes in fair value of cash flow hedges Net changes in fair value of financial assets Income tax (expense) / benefit relating to cash flow hedges Total comprehensive (loss) / income for the year (Loss) / profit attributable to: Owners of the parent Non-controlling interests Total comprehensive (loss) / profit attributable to: Owners of the parent Non-controlling interests Basic (loss) / profit per share Diluted (loss) / profit per share	Consolidated 31 Dec 2016 31 Dec 2015 $’000 $’000
	110,866 148,651 23,978 460 4,762 (5,239) (109,328) (92,097) (8,133) (11,441) (16,510) (12,874) (21,799) (22,315) 9,107 17,863 (12) (293) - (709) - (4,844) (24,071) - (6,385) (3,297)
	(37,525) 13,865 11,915 (1,893)
	(25,610) 11,972
	2,290 10,567 20,533 (18,548) (536) (397) (7,186) 6,590
	(10,509) 10,184
	(22,285) 12,127 (3,325) (155)
	(25,610) 11,972
	(8,736) 11,004 (1,773) (820)
	(10,509) 10,184
	(2.21) cents 2.29 cents (2.21) cents 2.25 cents

The accompanying notes form part of these financial statements.

Page 9

Perseus Mining Limited Statement of financial position As at 31 December 2016

Notes Current assets Cash and cash equivalents 4 Receivables 5 Inventories 6 Prepayments Derivative financial instruments 11 Assets of disposal group held for sale 14 Total current assets Non-current assets Receivables 5 Inventories 6 Available for sale financial assets 7 Property, plant and equipment 8 Mine properties 9 Mineral interest acquisition and exploration expenditure 10 Total non-current assets Total assets Current liabilities Payables and provisions Derivative financial instruments 11 Liabilities of disposal group held for sale 14 Total current liabilities Non-current liabilities Provision Deferred tax liability Total non-current liabilities Total liabilities Net assets Equity Issued capital 13 Reserves Retained earnings Parent entity interest Non-controlling interest Total Equity	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000
	54,655 151,257 21,154 43,648 59,974 58,849 5,659 4,256 30,712 - 14,019 12,289
	186,173 270,299
	13,173 12,724 4,032 2,517 4,508 5,044 298,548 240,803 241,453 227,245 194,354 184,443
	756,068 672,776
	942,241 943,075
	91,421 81,449 - 15,361 15,436 13,776
	106,857 110,586
	19,714 15,935 43,724 47,216
	63,438 63,151
	170,295 173,737
	771,946 769,338
	720,592 708,692 30,255 15,555 14,614 36,899
	765,461 761,146 6,485 8,192
	771,946 769,338

The accompanying notes form part of these financial statements.

Page 10

Perseus Mining Limited Statement of changes in equity For the half-year ended 31 December 2016

					Consolidated
	Issued capital	Retained earnings	Share based payments reserve	Foreign currency translation	Asset revaluation reserve	Hedge reserve	Non- controlling interest’s	Non- controlling interest	Total equity
				reserve			reserve
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Six months to 31 December 2016
Balance at 1 July 2016	708,692	36,899	19,904	5,500	2,794	(12,388)	(255)	8,192	769,338
Loss for the period	-	(22,285)	-	-	-	-	-	(3,325)	(25,610)
Currency translation differences	-	-	-	2,074	-	-	-	216	2,290
Net change in the available-for-sale financial assets	-	-	-	-	(536)	-	-	-	(536)
Net change in fair value of cash flow hedges	-	-	-	-	-	18,479	-	2,054	20,533
Income tax relatingto components of other comprehensive income	-	-	-	-	-	(6,468)	-	(718)	(7,186)
Total comprehensive(loss) / income	-	(22,285)	-	2,074	(536)	12,011	-	(1,773)	(10,509)
Shares issued during the period	7,651	-	-	-	-	-	-	-	7,651
Share issue expenses	(797)	-	-	-	-	-	-	-	(797)
Exercise of warrants	5,046	-	-	-	-	-	-	-	5,046
Share based payments	-	-	1,151	-	-	-	-	66	1,217
Non-controllinginterest arisingfrom change in ownershipinterest	-	-	-	-	-	-	-	-	-
Balance at 31 December 2016	720,592	14,614	21,055	7,574	2,258	(377)	(255)	6,485	771,946
Six months to 31 December 2015
Balance at 1 July 2015	476,427	72,539	19,212	(8,124)	(93)	10,762	250	12,249	583,222
Profit for the period	-	12,127	-	-	-	-	-	(155)	11,972
Currency translation differences	-	-	-	10,036	-	-	-	531	10,567
Net change in the available-for-sale financial assets	-	-	-	-	(397)	-	-	-	(397)
Net change in fair value of cash flow hedges	-	-	-	-	-	(16,557)	-	(1,991)	(18,548)
Income tax relatingto components of other comprehensive income	-	-	-	-	-	5,795	-	795	6,590
Total comprehensive income/ (loss)	-	12,127	-	10,036	(397)	(10,762)	-	(820)	10,184
Shares issued during the period	-	-	-	-	-	-	-	-	-
Share issue expenses	-	-	-	-	-	-	-	-	-
Share based payments	-	-	165	-	-	-	-	37	202
Non-controllinginterest arisingfrom change in ownershipinterest	-	-	-	-	-	-	(507)	31	(476)
Balance at 31 December 2015	476,427	84,666	19,377	1,912	(490)	-	(257)	11,497	593,132

The accompanying notes form part of these financial statements.

Page 11

Perseus Mining Limited Statement of cash flows For the half-year ended 31 December 2016

Notes Operating activities Receipts in the course of operations Payments to suppliers and employees Interest received Net cash (used in ) / from operating activities Investing activities Payments for exploration and evaluation expenditure Payments for acquisition of property, plant and equipment Payments for mine properties Payments for acquisition of assets under construction Net cash used in investing activities Financing activities Proceeds from share issues Proceeds from exercise of warrants Share issue expenses Acquisition of minority interest Net cash provided by / (used in) financing activities Net decrease in cash held Cash and cash equivalents at the beginning of the financial period Effects of exchange rate fluctuations on the balances of cash held in foreign currencies Cash and cash equivalents at the end of the financial period 4	Consolidated 31 Dec 2016 31 Dec 2015 $’000 $’000
	121,654 143,809 (139,498) (133,947) 457442
	(17,387) 10,304
	(5,804) (2,691) (110) (607) (9,887) (4,167) (77,629) (18,761)
	(93,430) (26,226)
	7,651 - 5,046 - (797) - - (475)
	11,900 (475)
	(98,917) (16,397) 151,257 103,741 2,3157,297
	54,655 94,641

The accompanying notes form part of these financial statements.

Page 12

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

ABOUT THIS REPORT

The interim financial statements are for the consolidated entity consisting of Perseus Mining Limited and its subsidiaries (the “group” or the “consolidated entity”). Perseus Mining Limited is a listed for-profit public company, incorporated and domiciled in Australia. During the half-year ended 31 December 2016, the consolidated entity conducted operations in Australia, Ghana and Côte d’Ivoire.

These consolidated interim financial statements of the consolidated entity for the period ended 31 December 2016 are general purpose condensed financial statements prepared in accordance with the requirements of the Australian Corporations Act 2001 (Cth) and AASB 134 ‘Interim Financial Reporting’.

These condensed interim financial statements do not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the group as in the full financial report. It is recommended that these interim financial statements be read in conjunction with the annual financial report for the year ended 30 June 2016, and any public announcements made by the group during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The consolidated interim financial statements are presented in Australian dollars, which is Perseus Mining Limited’s functional and presentation currency. These consolidated interim financial statements are rounded off to the nearest thousand dollars ($’000), unless otherwise indicated.

New and amended standards and interpretations adopted by the group

In the period ended 31 December 2016, the group has reviewed and adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or before 1 July 2016. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the group’s annual consolidated financial statements for the year ended 30 June 2016. As a result of this review the directors have determined that there is no change necessary to group accounting policies.

Historical cost convention

These consolidated interim financial statements have been prepared under the historical cost convention, except for derivative instruments and available for sale financial assets which are carried at fair value, as well as the disposal group which is carried at the lower of carrying value and fair value less cost of disposal.

Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed throughout the notes.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including the expectations of future events that may have a financial impact on the consolidated entity and that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting will, by definition, seldom equal the actual results. The estimates and assumptions that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in the notes indicated below.

	Note
Depreciation and amortisation	2
Unit-of-production method of depreciation/amortisation	2
Deferred stripping expenditure	2
Impairment	2
Income tax	3

Page 13

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

SIGNIFICANT JUDGEMENTS AND ESTIMATES – continued

Inventory Reserves and resources Exploration and evaluation expenditure 10 Derivative financial instruments 11 Measurement of fair value 12 Share based payments 13

1. SEGMENT INFORMATION

(a) Description of segments

Management has determined the operating segments based on the reports reviewed by the executive management team and board of directors that are used to make strategic decisions.

The group primarily reports on a geographical basis as its risks and rates of return are affected predominantly by differences in geographical areas in which it operates and this is the format of the information provided to the executive management team and board of directors.

The group operated principally in three geographical segments during the half-year ended 31 December 2016 being Australia and the West African countries of Ghana and Côte d’Ivoire. The segment information is prepared in conformity with the group’s accounting policies.

The group comprises the following main segments:

Australia	Investing activities and corporate management.
Ghana	Mining, mineral exploration, evaluation and development activities.
Côte d’Ivoire	Mineral exploration, evaluation and development activities.

Revenue is derived from two external customers arising from the sale of gold bullion reported under the Ghana reporting segment.

(b) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive management team and board of directors of the parent entity.

Page 14

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

1. SEGMENT INFORMATION – continued

(c) Segment information provided to the executive management team and board of directors

Revenue and other income Revenue Other income Total revenue and other income Results Operating (loss) / profit before income tax Income tax benefit / (expense) Net (loss) / profit Included within segment results: Impairment of available-for-sale financial asset Depreciation and amortisation Share based payments to employees, directors and consultants Foreign exchange gain / (loss) Assets Segment assets Unallocated assets of disposal group held for sale Total segment assets Total assets includes: Additions to non-current assets (other than financial assets) Liabilities Segment liabilities Unallocated liabilities of disposal group held for sale Total segment liabilities	Six months ending Australia Australia Ghana Ghana Côte d’Ivoire Côte d’Ivoire 31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015 $’000 $’000 $’000 $’000 $’000 $’000	Consolidated Consolidated 31 Dec 2016 31 Dec 2015 $’000 $’000
	- - 110,866 148,651 -- 293 238 7,881 222 15,804 -	110,866 148,651 23,978 460
	293 238 118,747 148,873 15,804 -	134,844 149,111
	(15,919) 10,387 (27,310) 5,344 5,704 (1,866)	(37,525) 13,865
	- (709) ---- (508) (352) (21,190) (21,883) (101) (80) (826) (98) (184) (89) (210) (11) 9,523 15,752 (396) 3,094 (20) (983) As at As at As at As at As at As at 31 Dec 2016 30 June 2016 31 Dec 2016 30 June 2016 31 Dec 2016 30 June 2016 $’000 $’000 $’000 $’000 $’000 $’000	11,915 (1,893)
		(25,610) 11,972
		- (709) (21,799) (22,315) (1,220) (198) 9,107 17,863 As at As at 31 Dec 2016 30 June 2016 $’000 $’000
	74,742 163,614 546,656 530,091 306,824 237,081	928,222 930,786
	32 159 35,750 66,343 51,298 131,118 22,168 3,763 121,257 150,943 11,434 5,255	14,019 12,289
		942,241 943,075
		87,080 197,620 154,859 159,961
		15,436 13,776
		170,295 173,737

Page 15

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

2. OTHER INCOME / EXPENSES

2. OTHER INCOME / EXPENSES (Loss) / profit before income tax has been determined after: Other income: Unrealised gain on fair value of gold forward contracts Interest Revenue Foreign exchange gain: Unrealised foreign exchange gain on translation of inter-company loans Unrealised foreign exchange (loss) / gain on translation of VAT receivable Unrealised foreign exchange gain on other translations Changes in inventories of finished goods and work in progress: (Write down) / write back of inventories due to (decrease) / increase in net realisable value	Consolidated Six months ended 31 Dec 2016 31 Dec 2015 $’000 $’000 23,587 - 391 460
	23,978 460
	9,125 15,798 (970) 2,020 952 45
	9,107 17,863
	(10,317) 1,850

(Write down) / write back of inventories due to (decrease) / increase in net realisable value is included in ‘changes in inventories of finished goods and work in progress’ in the statement of comprehensive income.

Finance costs: Interest and finance charges Other costs: Legal settlement	(12) (293)
	(24,071) -

BCM legal settlement relates to outstanding claims made by BCM against Amara in relation to contract mining services provided by BCM at Amara’s now closed Kalsaka and Seguenega mines in Burkina Faso.

Depreciation and amortisation: Amortisation of stripping asset Other depreciation and amortisation SIGNIFICANT JUDGEMENTS AND ESTIMATES	(314) (5,111) (21,485) (17,204)
	(21,799) (22,315)

(i) Impairment of assets

In determining whether the recoverable amount of each cash generating unit is the higher of fair value less costs to sell or value-in-use against which asset impairment is to be considered, the group undertakes future cash flow calculations which are based on a number of critical estimates and assumptions, and reflect the life of mine (“LOM”) operating and capital cost assumptions used in the group’s latest budget and LOM plans:

• (i) Mine life including quantities of mineral Ore Reserves and Mineral Resources for which there is a high degree of confidence of economic extraction with given technology;

• (ii) Estimated production and sales levels;

Page 16

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

2. OTHER INCOME / EXPENSES – continued

SIGNIFICANT JUDGEMENTS AND ESTIMATES – continued

(i) Impairment of assets - continued

• (iii) Estimate future commodity prices are based on brokers consensus forecast;

• (iv) Future costs of production;

• (v) Future capital expenditure;

• (vi) Future exchange rates; and/or

• (vii) Discount rates based on the group’s estimated before tax weighted average cost of capital, adjusted when appropriate to take into account relevant risks such as development risk etc.

Variations to expected future cash flows, and timing thereof, could result in significant changes to the impairment test results, which in turn could impact future financial results. The expected future cash flows of the cash generating units are most sensitive to fluctuations in the gold price and grade (changes in contained ounces).

(ii) Unit-of-production method of depreciation / amortisation

The group uses the unit-of-production basis when depreciating/amortising life of mine specific assets, which results in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item’s economic life, which is assessed annually, has due regard to both its physical life limitations and to present assessments of economically recoverable reserves of the mine property at which it is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. The group amortises mine property assets utilising tonnes of ore mined and mine related plant and equipment over tonnes of ore processed.

(iii) Deferred stripping expenditure

The group defers stripping costs incurred during the production stage of its operations. Significant judgement is required to distinguish between production stripping that relates to the extraction of inventory and what relates to the creation of a deferred waste asset. The group also identifies the separate components of the ore body. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping activity. Significant judgement is required to identify these components, and to determine the expected volumes of waste to be stripped and ore to be mined in each component and a suitable production measure to be used to allocate production stripping costs between inventory and any stripping activity asset(s) for each component. The group considers that the ratio of the expected waste to be stripped for an expected amount of ore to be mined, for a specific component of the ore body, is the most suitable production measure. Furthermore, judgements and estimates are also used to apply the units of production method in determining the amortisation of the stripping activity asset(s).

Changes in a mine’s life and design will usually result in changes to the expected stripping ratio (waste to mineral reserves ratio). Changes in other technical or economical parameters that impact reserves will also have an impact on the life of component ratio even if they do not affect the mine’s design. Changes to the life of the component are accounted for prospectively.

3. INCOME TAX BENEFIT / (EXPENSE)

The income tax benefit that has been recognised in the statement of comprehensive income comprises $11,915,211 (31 December 2015 income tax expense: $1,892,524), fully relating to the EGM loss for the period.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Judgement is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax assets, including those arising from un-utilised tax losses, require management to assess the likelihood that the group will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the group to realise the net deferred tax assets recorded at the reporting date could be impacted.

Additionally, future changes in tax laws in jurisdictions in which the group operates could limit the ability of the group to obtain tax deductions in future periods.

Page 17

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

4. CASH AND CASH EQUIVALENTS Cash assets (i) Short term deposits (ii)	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000 42,940 101,613 11,715 49,644
	54,655 151,257

• (i) Cash at bank earns interest at floating rates based on daily bank deposit rates.

(ii) Short-term deposits are made for varying periods, depending on the immediate cash requirements of the group, and earn interest at the respective short-term deposit rates.

5. RECEIVABLES

Current Trade debtors (i) Sundry debtors (i) Other receivable (ii) Allowance for doubtful debts (iii) Non-current Security deposits (iv) Movement in the allowance for doubtful debts: Balance at beginning of the period Foreign exchange translation gain Balance at the end of the period	1,349 15,258 5,424 9,271 18,255 22,870 (3,874) (3,751)
	21,154 43,648
	13,173 12,724
	13,173 12,724
	3,751 3,645 123 106
	3,874 3,751

Terms relating to the above financial instruments:

• (i) Trade and sundry debtors are non-interest bearing and generally on 30 day terms.

• (ii) Other receivable relates to GST and VAT receivable throughout the Group. At 31 December 2016, $18.3 million (30 June 2016: $22.9 million) related to a VAT refund receivable from the Ghana Revenue Authority (“GRA”). In early July 2016 two cheques from the GRA totalling GHS44.9 million (US$11.4 million) were received from the GRA for the VAT receivable. Further to this, in December 2016, a cheque of GHS21.6 million (US$5.1 million) was received from the GRA for the VAT receivable.

• (iii) Allowance for doubtful debts are recognised against sundry debtors for estimated irrecoverable amounts determined by reference to an analysis of the counterparty’s current financial position.

• (iv) At 31 December 2016, the group has US$9.5 million (approximately A$13.2 million) (30 June 2016: US$9.5 million, approximately A$12.7 million) held in bank deposits which are subject to a lien and are collateral for a bank guarantee that has been issued to the Ghana Environmental Protection Agency in relation to environmental rehabilitation provisions concerning the EGM.

Past due but not impaired

With the exception of $3.9 million disclosed above which is fully provided for, all of the remaining trade and other receivables are not past due.

Page 18

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

5. RECEIVABLES – continued

Fair value and foreign exchange and credit risk

Due to the short term nature of the current receivables, their carrying amount is assumed to approximate their fair value. Long term receivables are evaluated by the group based on parameters such as individual creditworthiness of the customer and specific country risk factors. The carrying amount of long term receivables is assumed to approximate fair value, as the security deposits that make up the long term receivables have a market based interest rate. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above.

The other receivable relating to a VAT refund from the GRA is immediately repayable on demand in Ghanaian Cedis (“GHS”), is unsecured and bears no interest. Since the authorisation of treasury credit notes by the GRA, payments of employment taxes, withholding taxes and royalties have been offset against the VAT receivable.

6. INVENTORIES

6. INVENTORIES Current Ore stockpiles – at cost Ore stockpiles – at net realisable value Gold in circuit – at net realisable value Bullion on hand – at net realisable value Materials and supplies	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000 - 5,407 5,797 9,919 9,123 6,557 11,225 - 33,829 36,966
	59,974 58,849

Inventory expense

The inventory expense during the six month period ended 31 December 2016 was $136.4 million (30 June 2016: $244.3 million). The write down of inventories due to a decrease in net realisable value recognised during the period ended 31 December 2016 amounted to $10.3 million (30 June 2016: write up of $13.1 million) and is included in ‘changes in inventories of finished goods and work in progress’ in the statement of comprehensive income.

Non-current

Non-current
Ore stockpiles – at net realisable value	4,032 2,517
	4,032 2,517

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Net realisable value tests are performed at least quarterly and represent the estimated future sales price of the product based on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile tonnages are verified by periodic surveys.

Page 19

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

7. AVAILABLE FOR SALE FINANCIAL ASSETS

Non-current Available for sale financial assets (i) Reconciliation of movements in available for sale financial assets: Balance at beginning of the period Additions Impairment of available for sale financial asset (ii) (Loss) / gain on fair value remeasurements Balance at end of the period	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000 4,508 5,044
	4,508 5,044
	5,044 2,820 - 46 - (709) (536) 2,887
	4,508 5,044

Terms and conditions relating to the above financial instruments:

• (i) The group’s investment in Manas Resources Limited (“Manas”) of $0.5 million and Amani Gold Limited (“Amani”), formerly Burey Gold Limited, of $4.0 million is recognised as an available for sale financial asset.

• (ii) During the half-year ended 31 December 2016, impairment of the investment in Manas and Amani was considered. No evidence of impairment existed. The investments in Manas and Amani are recognised at fair value at 31 December 2016.

Fair value measurements

Information about the group’s assumptions used in determining fair value is provided in note 12.

8. PROPERTY, PLANT AND EQUIPMENT

Plant and equipment - at cost Accumulated depreciation Reconciliation of plant and equipment: Balance at the beginning of the period Acquired on acquisition of a subsidiary Additions Transferred from assets under construction Depreciation Disposals Translation difference movement Carrying amount at the end of the period	210,234 193,218 (86,369) (74,487)
	123,865 118,731
	118,731 125,730 - 152 110 797 10,311 7,263 (9,171) (19,088) (5) (24) 3,889 3,901
	123,865 118,731

Page 20

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

8. PROPERTY, PLANT AND EQUIPMENT – continued

Assets under construction – at cost Reconciliation of assets under construction: Balance at the beginning of the period Acquired on acquisition of a subsidiary Additions Transferred to property, plant and equipment Transferred to mine properties Translation difference movement Carrying amount at the end of the period Total property, plant and equipment net book value 9. MINE PROPERTIES Mine properties - at cost Accumulated depreciation Reconciliation of mine properties: Balance at the beginning of the period Additions Transferred from assets under construction Amortisation Translation difference movement Carrying amount at the end of the period	Consolidated 31 Dec 2016 30 June 2016 $'000 $'000
	174,683 122,072
	122,072 84,942 - 461 67,232 58,084 (10,311) (7,263) (5,566) (15,678) 1,256 1,526
	174,683 122,072
	298,548 240,803
	406,300 374,203 (164,847) (146,958)
	241,453 227,245
	227,245 214,699 13,791 19,940 5,566 15,678 (12,628) (28,968) 7,479 5,896
	241,453 227,245

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Ore Reserves are estimates of the amount of ore that can be economically and legally extracted from the group’s mining properties. The group estimates it’s Ore Reserves and Mineral Resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body and this requires complex geological judgements to interpret data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgements made in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, goodwill, provision for rehabilitation, recognition of deferred assets, and depreciation and amortisation charges.

Page 21

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

10. MINERAL INTEREST ACQUISITION AND EXPLORATION EXPENDITURE

Mineral interest acquisition and exploration – at cost Reconciliation: Balance at the beginning of the period Acquired on acquisition of a subsidiary Additions Write-off of exploration Translation difference movement Carrying amount at the end of the period	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000 194,354 184,443
	184,443 41,568 - 147,107 5,947 8,972 - (17,921) 3,964 4,717
	194,354 184,443

The expenditure above relates principally to exploration and evaluation activities. The ultimate recoupment of this expenditure is dependent upon successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Management determines when an area of interest should be abandoned. When a decision is made that an area of interest is not commercially viable, all costs that have been capitalised in respect of that area of interest are written off. In determining this, assumptions, including the maintenance of title, ongoing expenditure and prospectivity are made.

11. DERIVATIVE FINANCIAL INSTRUMENTS

Current assets

Financial assets at fair value – gold forward contracts Current liabilities Cash flow hedge liabilities Financial assets at fair value – gold forward contracts	30,712 -
	30,712 -
	- 12,841 - 2,520
	- 15,361

Page 22

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

11. DERIVATIVE FINANCIAL INSTRUMENTS – continued

The group is party to derivative financial instruments in the normal course of business in order to hedge exposure to future price and currency fluctuations in the primary commodity markets in which it operates. This is done in accordance with the group's financial risk management policies.

Forward metal contracts – cash flow hedges:

The group uses cash flow designated USD forward metal contracts to manage movements in USD precious metal prices on its anticipated sales of gold. At 31 December 2016 there were no cash flow designated hedge contracts in place. During the period the cash flow hedges no longer met the criteria for hedge accounting and there was a reclassification to Financial assets at fair value – gold forward contracts. The cumulative loss that was recorded in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. The portion of the gain or loss on these hedging instruments that was determined to be an effective hedge, prior to reclassification to Financial assets at fair value – gold forward contracts, was recognised and retained directly in equity. The ineffective portion was recognised in the statement of comprehensive income, prior to reclassification to Financial assets at fair value – gold forward contracts.

The amount reclassified from equity during the year to the income statement, as a result of the occurrence of the forecast sale of gold that was hedged, was a loss of $11.1 million (30 June 2016 gain: $17.8 million).

Financial assets at fair value – gold forward contracts:

Financial assets at fair value through profit or loss include the change in value of gold forward contracts in place during the half-year ending 31 December 2016. The group uses USD forward metal contracts to hedge movements in USD precious metal prices on its anticipated sales of gold. The risk management policies related to these contracts are provided in note 12. Movements in fair value between inception and close-out of the contract are taken to profit and loss.

At 31 December 2016 the group held forward metal contracts for 165,973 ounces of gold with a weighted average price of US$1,287/oz. This includes 100,000 ounces of forward metal contracts at an average price of US$1,307/oz specifically to support the proposed Sissingué project finance debt facility. When necessary, these contracts may be rolled over into new contracts at maturity, subject to counterparty credit approval.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

The group makes judgements on the effectiveness of all derivative financial instruments entered into, including forward metal contracts, metal options and foreign currency option contracts. Management’s assessment is that, unless otherwise disclosed the derivatives have been highly effective in offsetting changes in the fair value of the future cash flows against which they have been designated and as such are compliant with the hedge effectiveness requirements of AASB 139.

Page 23

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

12. FINANCIAL RISK MANAGEMENT

Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the group as at 31 December 2016:

Financial assets: Receivables Gold forward contracts Total current Receivables Available for sale investments Total non-current Total Financial liabilities: Payables Total current Total	Loans and receivables / amortised cost Available-for- sale Fair value through profit and loss Fair value through other comprehensive income (cash flow hedge) $’000 $’000 $’000 $’000 21,154 - - - - - 30,712 -
	21,154 - 30,712 - 13,173 - - - - 4,508 - -
	13,173 4,508 - -
	34,327 4,508 30,712 -
	89,753 - - -
	89,753 - - -
	89,753 - - -

Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the group as at 30 June 2016:

Financial assets: Receivables Total current Receivables Available for sale investments Total non-current Total Financial liabilities: Payables Gold forward contracts Derivative financial instruments Total current Total	Loans and receivables / amortised cost Available-for- sale Fair value through profit and loss Fair value through other comprehensive income (cash flow hedge) $’000 $’000 $’000 $’000 43,648 - - -
	43,648 - - - 12,724 - - - - 5,044 - -
	12,724 5,044 - -
	56,372 5,044 - -
	79,868 - - - - - 2,520 - - - - 12,841
	79,868 - 2,520 12,841
	79,868 - 2,520 12,841

Page 24

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

12. FINANCIAL RISK MANAGEMENT – continued

Fair values

Set out below is a comparison of the carrying amounts and fair values of financial instruments:

Financial assets: Receivables Gold forward contracts Total current Receivables Available for sale investments Total non-current Total Financial liabilities: Payables Gold forward contracts Derivative financial instruments Total current Total	Consolidated 31 Dec 2016 30 June 2016 Carrying amount Fair value Carrying amount Fair value $’000 $’000 $’000 $’000 21,154 21,154 43,648 43,648 30,712 30,712 - -
	51,866 51,866 43,648 43,648 13,173 13,173 12,724 12,724 4,508 4,508 5,044 5,044
	17,681 17,681 17,768 17,768
	69,547 69,547 61,416 61,416
	89,753 89,753 79,868 79,868 - - 2,520 2,520 - - 12,841 12,841
	89,753 89,753 95,229 95,229
	89,753 89,753 95,229 95,229

Fair value hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

• Level 2 Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable)

• Level 3 Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable)

For financial instruments that are recognised at fair value on a recurring basis, the group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

There were no transfers between categories during the period.

Page 25

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

12. FINANCIAL RISK MANAGEMENT – continued

The following table presents the group’s financial instruments measured and recognised at fair value:

31 December 2016 Financial assets: Available for sale instruments Gold forward contracts Total 30 June 2016 Financial assets: Available for sale instruments Total Financial liabilities: Gold forward contracts Derivative financial instruments Total Valuation techniques	Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 4,508 - - 4,508 - 30,712 - 30,712
	4,508 30,712 - 35,220
	5,044 - - 5,044
	5,044 - - 5,044
	- 2,520 - 2,520 - 12,841 - 12,841
	- 15,361 - 15,361

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and availablefor-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. The valuation techniques include forward pricing using present value calculations. The models incorporate various inputs including the credit quality of counterparties and forward rate curves of the underlying commodity. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

• Quoted market prices or dealer quotes for similar instruments.

• The fair value of forward exchange contracts is determined using forward exchange market rates at the end of the reporting period.

• Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The net fair value of cash and cash equivalents and non-interest bearing financial assets and liabilities of the group approximate their carrying values. The carrying values (less impairment provision if provided) of trade receivables and payable approximate their fair values due to their short-term nature. The carrying amount of long term receivables is assumed to approximate fair value, as the security deposits that make up the long term receivables have a market based interest rate.

Page 26

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

12. FINANCIAL RISK MANAGEMENT – continued

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Measurement of fair values

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

13. ISSUED CAPITAL AND RESERVES

(a) Issued and paid-up share capital 1,031,818,701 (31 December 2015: 529,343,901) ordinary shares, fully paid	Consolidated 31 Dec 2016 31 Dec 2015 $’000 $’000
	720,592 476,427

Balance at the beginning of the period Transaction costs arising from issue of securities for cash Vesting of performance rights on 29 July 2015 Share placement at issue price of $0.44 pursuant to the exercise of warrants Share placement at issue price of $0.50 on 22 July 2016 Vesting of performance rights on 28 July 2016 Balance at the end of the period	Consolidated 31 Dec 2016 31 Dec 2015 $’000 Number $’000 Number
	708,692 1,004,653,217 476,427 526,656,401 (797) - - - - - - 2,687,500 5,046 11,488,115 - - 7,651 15,302,369 - - - 375,000 - -
	720,592 1,031,818,701 476,427 529,343,901

(b) Performance rights

Performance rights have been granted as follows:

Grant date End of measurement period Expiry date Exercise price	Opening balance Performance rights issued Performance rights exercised Performance rights forfeited Closing balance 1 July 2016 31 Dec 2016 Number Number Number Number Number
1-Jan-14 31-Dec-16 30-Jun-17 nil 4-Jun-14 31-Dec-16 30-Jun-17 nil 1-Jan-15 30-Jun-16 31-Dec-16 nil 1-Jan-15 31-Dec-17 30-Jun-18 nil 1-Jul-15 30-Jun-17 31-Dec-17 nil 20-Nov-15 30-Jun-17 31-Dec-17 nil 20-Nov-15 30-Jun-18 31-Dec-18 nil 13-Jan-16 31-Dec-16 30-Jun-17 nil 1-Jul-16 30-Jun-17 31-Dec-17 nil 1-Jul-16 30-Jun-18 31-Dec-18 nil 1-Jul-16 30-Jun-19 31-Dec-19 nil 1-Jul-16 31-Dec-17 30-Jun-18 nil 1-Jul-16 31-Dec-18 30-Jun-19 nil	1,925,000 - - (62,500) 1,862,500 562,500 - - - 562,500 750,000 - (750,000) - - 750,000 - - (500,000) 250,000 4,725,000 - - (850,000) 3,875,000 800,000 - - - 800,000 500,000 - - - 500,000 1,325,000 - - (450,000) 875,000 - 1,241,668 - - 1,241,668 - 991,666 - - 991,666 - 866,666 - - 866,666 - 1,925,000 - - 1,925,000 - 5,700,000 - - 5,700,000
	11,337,500 10,725,000 (750,000) (1,862,500) 19,450,000

Page 27

Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

13. ISSUED CAPITAL AND RESERVES – continued

SIGNIFICANT JUDGEMENTS AND ESTIMATES

The consolidated entity measures the cost of equity-settled transactions with employees and consultants by reference to the fair value of the equity instruments at the date at which they were granted. The fair value of options granted is determined using a Black-Scholes model and the fair value of performance rights granted is determined using a Monte Carlo simulation model.

(c) Ordinary shares

Ordinary shares entitle the holder to participate in dividends as declared and, in the event of winding up of the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

(d) Nature and purpose of reserves

A summary of the transactions impacting each reserve has been disclosed in the statement of changes in equity.

Share based payments reserve

The share based payments reserve is used to record the fair value of options and performance rights issued but not exercised.

Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity along with Perseus’s share of the movement in its associate’s foreign currency translation reserve.

Non-controlling interest’s reserve

The non-controlling interest’s reserve records the difference between the fair value of the amount by which the noncontrolling interests were adjusted to record their initial relative interest and the consideration paid.

Hedge reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedged transactions that have not yet occurred.

Asset revaluation reserve

The asset revaluation reserve is used to record the revaluation of the investment in Manas Resources Limited and Amani Gold Limited to fair value as the investment is designated as an available for sale financial asset.

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Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

14. DISPOSAL GROUP HELD FOR SALE

The Burkinabe subsidiaries that that were acquired by Perseus through the Amara acquisition have been presented as a disposal group held for sale. The decision to sell the assets was made by the Amara Board and negotiations are ongoing by Perseus to sell the Burkinabe assets. The subsidiaries held for sale are Kalsaka Mining SA (“KMSA”), Cluff Gold Sega Sarl and Cluff Mining Burkina Sarl. The disposal group has been treated as a discontinued operation.

At 31 December 2016, the disposal group comprised the following assets and liabilities:

Assets of disposal group held for sale Property, plant and equipment Inventory Other receivables and recoverable taxes Security deposits Cash and cash equivalents Total assets of disposal group held for sale Liabilities of disposal group held for sale Trade and other payables Provisions Total liabilities of disposal group held for sale	31 Dec 2016 30 June 2016 $’000 $’000 6,607 6,447 19 53 3,638 2,022 3,737 3,747 18 20
	14,019 12,289
	10,526 8,822 4,910 4,954
	15,436 13,776

There is no cumulative income or expenses included in other comprehensive income relating to the disposal group.

15. CONTINGENCIES

During the period, there was a legal settlement to BCM relating to outstanding claims made by BCM against Amara for contract mining services provided by BCM at Amara’s now closed Kalsaka and Seguenega mines in Burkina Faso. Under the settlement agreement, a total of US$20.0 million was to be paid to BCM, of which US$5.0 million was paid as at 31 December 2016.

There were no other known contingent liabilities since the annual financial report for the year ended 30 June 2016.

16. COMMITMENTS

(a) Exploration expenditure commitments

With respect to the group’s mineral property interests in Ghana and Côte d’Ivoire, statutory expenditure commitments specified by the mining legislation are nominal in monetary terms. However, as part of mineral licence application and renewal requirements, the group submits budgeted exploration expenditure. In assessing subsequent renewal applications, the mining authorities review actual expenditure against budgets previously submitted. The group’s budget expenditures for future periods are shown below. These amounts do not become legal obligations of the group and actual expenditure may and does vary depending on the outcome of actual exploration programs, and the costs and results from those programs.

Within one year One year or later and not later than five years Later than five years	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000 400 1,500 3,000 2,800 - 3,500
	3,400 7,800

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Perseus Mining Limited Notes to the financial statements For the half-year ended 31 December 2016

16. COMMITMENTS - continued

(b) Capital commitments

The group is responsible for all rehabilitation of the EGM mining leases, which are currently estimated to cost approximately US$9.7 million and a provision has been recorded for this at balance date. As the development of Sissingué is now well advanced, the group is responsible for the rehabilitation of the areas it has disturbed, which is currently estimated to cost approximately US$2.0 million and a provision has been recorded for this at balance date. The group is also responsible for the rehabilitation of the historical heap leach operations at Yaouré in Cote d’Ivoire, which are currently estimated to cost approximately US$2.2 million and a provision has been recorded for this at balance date. The group does not have any material commitments in relation to the construction of the SGP as at 31 December 2016.

(c) Operating lease commitments

The company leases office premises under normal commercial arrangements. The lease is for a period of 5 years beginning 1 April 2012. The company is under no legal obligation to accept a renewal of the lease once the lease term has expired.

Future minimum lease payments payable under non-cancellable operating leases at 31 December 2016 are as follows:

Within one year One year or later and not later than five years	Consolidated 31 Dec 2016 30 June 2016 $’000 $’000 311 303 1,421 -
	1,732 303

17. EVENTS OCCURING AFTER THE END OF THE REPORTING PERIOD

Since the end of the period and to the date of this report no matter or circumstance has arisen that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial periods other than:

• (a) On 14 February 2017 KMSA, which represents the majority of the disposal group held for sale as at 31 December 2016, went into liquidation following court appointment of a liquidator for the entity; and

• (b) On 17 February 2017, 1,062,500 performance rights successfully vested under the terms of the company’s Performance Rights Plan and converted to ordinary shares on a 1 for 1 basis on satisfaction of specified conditions. The shares were issued to employees at nil consideration as part of employee remuneration.

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Perseus Mining Limited Directors’ declaration 31 December 2016

DIRECTORS’ DECLARATION

In the opinion of the directors of Perseus Mining Limited (the ‘Company’):

• (a) The accompanying financial statements, and notes are in accordance with the Corporations Act 2001 including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half year then ended; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 ; and

• (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Pursuant to s.303(5) of the Corporations Act 2001, this declaration is signed in accordance with a resolution of the Board of Directors.

J A Quartermaine

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Managing Director

Dated at Perth, 24 February 2017

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

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To the members of Perseus Mining Limited

Report on the half-year financial report

We have reviewed the accompanying half-year financial report of Perseus Mining Limited (the company), which comprises the statement of financial position as at 31 December 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, other information as set out in Appendix 4D to the Australian Stock Exchange (ASX) Listing Rules and the directors’ declaration of the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ responsibility for the interim financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and complies with the ASX Listing Rules as they relate to Appendix 4D. The directors are also responsible for such internal controls that the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and its performance for the halfyear ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting , the Corporations Regulations 2001 and the ASX Listing Rules as they relate to Appendix 4D. As the auditor of Perseus Mining Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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GB:EH:PRU:068

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Perseus Mining Limited is not in accordance with:

• a) the Corporations Act 2001 , including:

• i giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

• ii complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 ; and

• b) the ASX Listing Rules as they relate to Appendix 4D.

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Ernst & Young

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Gavin Buckingham Partner Perth 24 February 2017

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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GB:EH:PRU:068